We believe a short and simple definition does not do the issue justice, but one is necessary to crystallize what is otherwise an ambiguous, intangible subject. So we would define business ethics as:
The application of a moral code of conduct to the strategic and operational management of a business.
Business ethics and therefore business morality generally result from an individual's own moral standards in the context of the political and cultural environment in which the organization is operating. There is a whole separate debate, of course, on which macro-economic system works best to deliver good corporate ethics and governance - especially currently after what some would argue as a failure in the capitalist model (regardless of your views it is clearly undergoing the most significant trauma for nearly a century). That is beyond the scope of this page, though, where we focus on the above definition, extrapolating on the various elements implied therein and opening up the debate to you, the visitor.
Three levels of business ethics
In our mission to define business ethics, Johnson and Schools provide a useful way of classifying the diverse elements therein:
The macro level:
a. The role of business in the national and international organization of society
b. The relative virtues of different political/social systems, such as free enterprise, centrally planned economies, etc
At the highest (macro) level, we ask the fundamental question of the role of business in society and what governance model works best to deliver the most benefits in a moral and responsible way. Morality itself is, of course a widely interpretable concept but for this purpose we will assume a broad understanding: that of "proper behavior" and "knowing the difference between right and wrong", without specifying what constitutes right and wrong. (This is a whole debate unto itself and subject to cultural and individual relativism). Suffice it to say here that morality sets the stage for ethics, and therefore the code of conduct by which business activity is carried out and allowed to be carried out by national and international rules and standards.
The corporate level:
a. Corporate social responsibility
b. Ethical issues facing individual corporate entities (private and public sector) when formulating and implementing strategies
At the corporate level, the interpretation of those rules and standards is often what defines business ethics, affected by the specific circumstances and socio-cultural context in which the business or public sector organization is operating. While all corporate entities in theory are directly influenced by personal morality and ethics, in practice there is often a gap between the behavior of individuals within the working environment and outside it. This, we would argue, is one of the major factors leading to mistrust of big business, where the separation of ownership and management is greatest, and so open to abuse. Even if directors/senior managers are not acting unethically, it is likely they would act differently if the money and the company about which they are making decisions were their own. (There are obvious exceptions as with any generalization.)
The individual level:
a. The behavior and actions of individuals within organizations
At the individual level, this separation creates a distinct ethical model - business ethics - which, depending on factors like personality, peer pressure and the socio-political environment, can be closer or further away from the individuals own moral/ethical code of conduct. With limited liability meaning individuals are protected this can affect smaller businesses too as the consequences of one's actions has a greatly reduced impact on personal circumstances. Clearly, every corporate entity is directly affected by the individual's moral and ethical stance - and any difference between business and personal ethics is itself arguably an indictment of that individual stance as it implies some level of double standards.